Augmented Reality in Retail: Market Overview

AnastasiaMorozovaChief Operating Officer

More and more companies understand the potential of augmented reality for promoting their products. Of course, the active use of augmented reality for retail began with market giants such as IKEA, L’Oréal, Converse, Ray-Ban, and Lego.

However, with the launch of platforms like ARKit from Apple and ARCore from Google for the augmented reality application development, AR technology has become accessible to both medium and small retail companies.

Augmented reality retail market in 2018

Today, the demand for augmented reality in retail is growing at a tremendous pace due to several factors. Let’s study the reasons for the significant popularity of AR technology and the extent of AR for the retail market.

What raises the demand for AR technologies in the retail sector?

The essential reasons that raise the demand for augmented reality in retail are:

The growth of online sales market.

Augmented reality is a perfect instrument for e-commerce. The larger becomes the e-commerce market, the more possibilities there are for using augmented reality technology.

Meanwhile, the online sales market is steadily growing. We can trace this trend in the graph below.

The increase in the share of sales through mobile phones and tablets.

Augmented reality provides far more possibilities when used on mobile devices than in web versions on the desktop. Therefore, the growth of sales through mobile devices stimulates the development of augmented reality in e-commerce.

In digital retail, the focus shifts to selling through smartphones. According to PwC’s Global Consumer Insights Survey, the share of online sales through mobile phones has grown from 7% in 2013 to 17% in 2018. While desktop-based sales share decreased from 27% to 20% during this period.

The emergence of accessible augmented reality frameworks, in particular, ARKit.

One of the greatest drives for the extensive use of augmented reality in retail was the release of ARKit in June 2017. Apple’s ARKit is a framework that allows developers to create various augmented reality applications for iOS easily.

The latest release of ARKit 2.0 in June 2018 can revolutionize the development and distribution of augmented reality applications.

The new version of ARKit technology provides high accuracy of tracking the phone’s position in space and recognition of planes in the surrounding world. Thus, ARKit 2.0 creates much greater opportunities for the developers of AR apps.

As reported by Apple, the number of active iPhones in 2018 is about 880 million. It means an enormous progressive audience, to which you will get access, using ARKit technology to create your augmented reality applications.

What types of AR are growing in the retail sector?

Today, AR apps for interior design are the most popular. These augmented reality apps make it possible to understand whether some piece of furniture fits in the proper place and how it will look in the existing interior, or choose the perfect color for the walls without using the professional designer’s services.

Presumably, the branch of AR apps for design will continue to grow, as users are more willing to buy goods from companies that have augmented reality applications for the interior design.

Virtual try-on is also an extremely popular type of AR apps. Virtual fitting helps users make purchasing decisions smoother and faster and significantly reduces the rate of return of goods.

Therefore, many brands including Converse, Lacoste, Zara, American Apparel, Ray-Ban, L’Oreal are using virtual try-on to sell their products.

How much money is on this market?

According to Research and Markets, it is expected that the augmented reality share in the retail market in 2018 will equal $1155 million. And by 2023, this amount can reach $7951 million.

This market shows a steady upward trend due to the increasing interest of consumers in using AR technology. 69% of 18-24-year-olds are more likely to purchase from companies that use the augmented reality to promote their products, according to the Digital Bridge statistics.

At the same time, for business, the entry barrier for the use of augmented reality significantly lowers. ARKit technology gives sufficient opportunities for small companies to promote their products with AR.

It is expected that with the further development of AR technology, the cost of augmented reality development will only reduce. Thus, AR campaigns in retail will significantly increase.

What do consumers shop for with augmented reality?

Augmented reality can improve customer experience when purchasing most goods. Let’s look at some spheres of digital retail in which augmented reality has already shown its benefits to customers.

Fashion

Usually, when picking clothes on the Internet, customers are having a lot of doubts. Did they choose the right size? Do this color and style fit them? Will this thing match other clothing?

Virtual fitting answers all these questions. With the help of this augmented reality solution, customers can choose the most appropriate clothes, shoes, hats, and glasses online.

Also, in-store mirrors and fitting rooms using augmented reality technology help pick up clothes right in the shops without spending time on the physical fitting.

Often, virtual fitting rooms in stores give the possibility to save looks, send photos to the customer via email or share photos on social networks. So consumers can instantly ask for advice from their friends, and it is easier to decide whether to buy a particular set of clothes.

Cosmetics

When customers come to the store, they don’t have the opportunity to do makeup with the help of selected cosmetics. Whereas, with the augmented reality applications, customers can see how total makeup will look on them and compare different makeup options.

Virtual makeovers are already used by many companies such as Maybelline, Sephora, L’Oréal, Estée Lauder and NYX Professional Makeup.

In addition to decorative cosmetics, augmented reality is suitable for the promotion of caring or medical cosmetics. For example, ModiFace Skin AI analyzes the user’s skin condition, offers care options and demonstrates skin changes during the care process.

Furniture and interior design

A significant number of consumers postpone redecoration or purchase of furniture because they can not visualize how the finished design will look like. It is not always possible to appeal to professional designers. Then AR apps for the design come in handy.

Many companies use augmented reality to give users the opportunity to “put” the selected furniture in the interior, to see whether it is appropriate in style and color and to determine if there is enough place for the furniture.

Perhaps at the moment, the most famous AR app for choosing furniture is IKEA Place. But small companies also have similar applications. For example, the Polish startup Tylko Shelf, which produces shelves of unusual configuration, allows customers to find the perfect shelves for their interior using an augmented reality application.

Also, augmented reality solutions help customers in choosing various decorative elements, lighting, wallpaper, tiles, or wall colors. In augmented reality applications, users can save different designs. Therefore, it’s easy to compare the options and choose the best one.

Jewelry

More and more customers prefer to shop online. This also refers to jewelry.

But because the price of jewelry is rather high and it often does not cover the usual return conditions, customers want to be confident in their choice. In this case, AR apps can help.

The users of AR apps can get a perfect view of the jewelry with interactive three-dimensional videos, and also virtually try-on.

Toys

Augmented reality helps customers choose toys. With augmented reality technology, you can show how a mechanical toy works or what an assembled kit looks like. You can make a step further, and offer users an interactive augmented reality game with your toys.

A good example is Lego, which uses augmented reality terminals in their stores to show the appearance of assembled kits. They also developed a free augmented reality app for iOS – Lego AR Studio, where you can play with various Lego sets.

Augmented reality use cases in the retail industry

AR works great for increasing sales. Let’s consider the examples of successful applications of augmented reality in retail.

Fashion e-commerce

Consumers often find it difficult to choose the right size for clothes in online stores. As a result, the customer either does not buy anything or orders several things for fitting, returning some of them to the seller afterward.

For fashion retailers handling returns entails high expenses. Thus, digital retail is continually looking for ways to solve the problem of returns.

At the moment, Amazon is very close to solving this difficulty using augmented reality technology for virtual clothes fitting.

Amazon virtual fitting is based on the developments of the Body Labs company. Body Labs unique AR technology allows you to scan the image of the human body, creating the most accurate three-dimensional digital model.

In-store mirrors

Fashion companies use augmented reality in-store mirrors to draw the attention of customers. By placing an AR mirror in the shop display, you can stand out from your competitors.

Augmented reality mirrors are appealing to customers because of new experience. Therefore, many passers-by stop to try on your clothes. In addition, it is very likely that such an unusual fitting will result in the purchase of your product.

Virtual fitting rooms

Virtual fitting rooms work excellent in physical stores for several reasons. First, they save time on physical fitting. Secondly, they are great for those who don’t like to try on real clothes in stores.

Virtual dressing rooms also allow customers to save photos to make a purchasing decision later. And, which is especially useful for business, these photos can be shared on social networks.

In-store navigation

Despite the increase in the e-commerce market, still, the majority of purchases are made in physical stores. However, sometimes it’s difficult for the visitor to navigate the store looking for the desired product.

Augmented reality can solve the problem of in-store navigation. With the help of applications of augmented reality, you can show visitors the arrangement of departments, tell them the route, and even point to a shelf with a specific product.

Also, augmented reality applications will help you sell more by leading buyers to related products or departments with sales and discounts.

The most popular augmented reality retail apps

Today there is a large number of successful AR campaigns in the retail sector. But there are remarkable apps that attracted enormous user attention to augmented reality technology and showed what the future of retail should be.

IKEA Place

One of the most famous examples of using AR for selling furniture is the IKEA Place app. The AR application scans the space of the room and makes it possible to place real scale furniture items. Thus, you no longer need to play with measurements and worry about making a mistake in the estimations of free space.

IKEA Place users can change the colors of the furniture and turn it around to find the most suitable position. This AR app also allows you to save new interiors and share them with relatives and friends.

Zara AR Studio

Zara decided to attract the attention of millennials to the brand, creating a unique user experience with the help of augmented reality. Therefore, in April 2018, the brand launched the Zara AR Studio shopping app.

By installing this application, the user can point the camera on a Zara storefront window or on a mannequin to see a video with a model in the brand clothes. Then the user can go to the interface of purchasing clothes or choosing related items.

Many users share videos from Zara AR Studio on Instagram and other social networks, attracting more and more interest to the Zara brand.

Koski

Augmented reality technology can also be integrated into the product to make it more engaging for the audience. Koski uses augmented reality to gamify user experience and create a wow effect.

Koski project was offered on Kickstarter and quickly raised the amount needed for the launch.

Physically, Koski is the usual kit of wooden blocks. However, with the unique augmented reality app on the iPad, it turns into an interactive world with funny characters and a unique landscape.

Recent trends that shape the future of AR in retail

Augmented reality has moved beyond entertainment and brings more and more practical benefits for businesses. In this regard, there are some trends shaping the future of augmented reality for retail:

Development of in-store experience using augmented reality technology.

Already, supermarkets, clothing, and appliance stores are taking steps in AR in-store navigation and providing additional product information with AR apps. Further development in this direction can completely change the future of brick and mortar stores.

Improved technology of scanning and creating three-dimensional models of the human body.

These improvements will make the virtual fitting much more accurate. Thus, users can rely on virtual fittings. In addition, the possibilities for the use of virtual fittings will significantly expand.

Online virtual fitting will become mainstream.

Already, Facebook is experimenting with the use of virtual try on in advertising campaigns. Amazon is also working to incorporate augmented reality technology into its sales process. So the day is not far off when virtual fitting will become common practice in online sales.

Today is the right time to build an AR app

As we see, the technology of augmented reality is continuously improved and is becoming more popular. In our opinion, the future of retail is inevitably connected with augmented reality.

Therefore, today it is worth thinking about augmented reality application development in the retail sector. With the AR app, you will be a progressive retail company attracting more and more customers.

Our company has experience in augmented reality development for various retail fields. We will help you choose the most appropriate type of AR application for your area, target audience and budget. Contact us to get the most out of augmented reality.